Local IDA’s to retain tax exemption control in budget

April 8, 2013

Sometimes initiatives not included in the final state budget are just as important as those that make the spending plan.

One of the initiatives that didn't make the final budget would have taken power away from local Industrial Development Agencies.

In Gov. Andrew Cuomo's budget, the state's IDAs would no longer be able to grant state sales tax exemptions for economic development projects. Instead, that authority would have gone to Cuomo's Regional Economic Development Councils. New York's IDAs have the ability to give out local and state tax breaks in order to encourage economic development. The governor said the change would keep IDAs accountable by requiring them to have projects that involve state tax exemptions be approved by regional councils.

Bill Daly, Chautauqua County IDA executive director, said Cuomo's attempt to take away the ability for IDAs to abate the 4 percent state sales tax on new building or expansion projects was condemned by every business and economic development group in the state.

"What (Gov. Cuomo) wanted was to get the projects approved by the state's regional councils. If that would have been approved, it would have taken all control from us (IDAs),'' Daly said. "Unshackle Upstate and The Business Council were totally opposed to this. The blowback on the governor was tremendous. Neither the Assembly or the Senate put it in their budget bills.''

One item in the budget that will help local businesses is a plan to reduce the costs and red tape for unemployment insurance and workers' compensation. The budget modernizes and simplifies both systems to provide employers $1.3 billion in savings without affecting workers' benefits. Daly said for unemployment insurance, the state's budget did away with one expense for employers that wasn't fair.

"Let say someone has a job for awhile and resigns and takes a new job, and right away they get fired. The unemployment insurance would come back on the previous employer based on the length of service. This was a huge expense for businesses,'' he said. "I've seen this before when someone leaves us voluntarily and then either quits or gets fired from their new employer. The unemployment insurance cost comes back on the previous employer. They have to pay the unemployment insurance. This has now been eliminated. This is huge reform.''

Daly said one area where the state missed on reform was with the state's retirement plan. Daly said the state's retirement plan needs to be more like a 401k program for new employees, which is similar to what most private businesses have for their workers.

"They could save $150 to $160 billion. That would be true honest savings,'' he said. "There was no reform where the reform is most needed.''

THE BUSINESS COUNCIL, UNSHACKLE UPSTATE OPINIONS ON STATE BUDGET

Daly said a couple of state business groups - Unshackle Upstate and The Business Council - are unhappy with the state's budget.

"Over the past two years, Gov. Cuomo and the Legislature have passed budgets that set the state's economy on the right path. Unfortunately for Upstate taxpayers and employers, the new New York looks a lot like the old New York,'' said Brian Sampson, Unshackle Upstate executive director. "But overall, this budget is a disappointment. The reality is that New Yorkers will remain over-burdened and over-taxed.''

Heather Briccetti, The Business Council of New York State president and chief executive officer, said the budget controls the growth of state government to less than 2 percent, which The Business Council supports.

"However, the budget will also add to the cost of doing business by extending assessments on electric, natural gas and steam energy (a total of $1.5 billion), and by increasing the minimum wage - a measure whose impact will be felt by many businesses, with total cost estimates as high as $2 billion per year. While the final agreement on both of these measures is an improvement over the original executive budget proposals, they are not consistent with a strategy to promote economic growth and the creation of good paying jobs,'' Briccetti said.